Lion Air to establish domestic joint venture

INDONESIA's Lion Air will establish a joint venture with a small Brisbane-based airline to operate domestic and long haul services from Australia.

Lion Air Australia expects to begin services with six new extended range Boeing 737's by the end of the year.

David Charlton, chief executive of Sky Air World, an infant aviation business trading out of Brisbane's Eagle Farm airport, confirmed his company would own 51 per cent of the new business with Lion Air holding a 49 per cent stake.

As a result of the deal Lion Air Australia will have the same air traffic rights to operate here as any Australian-owned airline.

Under Australian regulations a foreign investor can have a maximum 49 per cent stake in a local airline, but Lion Air president Rusdi Kiranait was reported as saying that his company would be the operator and control the business.

Pressed about which company would be in charge, Mr Charlton said that executive positions "had yet to be allocated".

Under Australian regulations, a foreign investor can have a maximum 49 per cent stake in a local airline, but it has been agreed that Lion would be the operator and control the management.

In a statement issued last night, both partners noted that routes, fares and frequencies were still being developed.

"We will be connecting points not currently serviced and creating a fantastic new offering for the travelling public," Mr Charlton said, confirming that Indonesia and Thailand would be part of the airline's network.

He said Lion Air Australia would be "a good value carrier" offering both business and premium economy seats.

"We will offer a good value for money product for the holiday and business traveller, including connections between Australia and its most populous neighbour, Indonesia," Mr Charlton said.

A spokesman for the Sydney-based Centre for Asia Pacific Aviation, Derek Sadubin, said Lion Air was a reputable airline with a solid funding base.

"It is one of the most focused Indonesian carriers, with good management and is one of the fastest growing carriers in Indonesia," Mr Sadubin said.

The Indonesian airline operates more than 200 services a day from Jakarta to regional destinations with a fleet of 40 aircraft.

The airline also is the first customer for Boeing's new model 737-900, 215-seat extended range jet, the first six of which will be handed to the Australian business.

The planes have an operating range of 5925km, giving Lion Air Australia the ability to operate non-stop services to regional centres in Asia and the South Pacific.

Until yesterday, Sky Air Services had a chequered history, having launched in 2006 with a single and second-hand 76-seat Brazilian built Embraer passenger jet.

The aircraft operated a short-lived service as Air Solomons for the Solomons Island Government.

Since August, when the service stopped amid a row between Sky World and the Solomons authorities, the Embraer has been operating charters from Perth.

Apart from the new Boeings, Sky World also has two additional Embraer aircraft ordered.

The new company will have a bigger fleet than Asian-based rival Tiger Airways which has four Airbus A320 commuter jets operating from Melbourne.